I firmly believe that if you've got an intention for achieving anything in life you've got to set goals in order to get there. For the past few years now at the start of each year I've set some financial targets to reach by year end and some years I've reach them and other years..... not quite.....
Lately I've been reading up on strategies for managing money and some philosophies and strategies I have identified with and want to employ are:
1. Accumulate more assets than liabilities - from Robert T. Kiyosaki's Rich Dad Poor Dad. Assets being shares, bonds, investment properties (not your residential property, although equity in this can be used to propel you to purchase assets). Liabilities are the "stuff" that you might have in your life such as cars, boats, jet skis, shoe collection, wardrobe etc etc
2. Mind Your Own Business - also from Robert T. Kiyosaki's Rich Dad Poor Dad. This does not have to do with being polite about other people's issues but means manage your money and your household like you would if it was a business.
3. Portion out income into 3 buckets - a recommended strategy by Australia's "Barefoot Investor" Scott Pape. These are a) a spending bucket for living expenses (such as mortgage, food, insurance, utilities), b) a saving bucket for financial security (suggested to be kept in a high interest online account) and c) a bucket for investing (in shares or property). Scott's website www.barefootinvestor.com is a fantastic resource for putting in place a strategy to reach your financial goals and I highly recommend it!
Right! So, how to employ these strategies, and what goal do I want to achieve? Well, it was only a couple of years ago when I was on Maternity Leave with my second child that I found that I could live off a lower income quite comfortably without having to sacrifice our family lifestyle radically. But that was a forced situation and now being back at work for a couple of years it's been easy to fall into higher spending habits, and this is what I'd like to stop. My goal is to be able to save 1/3 of my wage each month, so that in about 18 months I should have 6 months' worth of wages saved providing a solid base for my family's financial security.
The next step will be to map out a path to reduce spending and save that 1/3 of my wage!
If you employ any money management strategies that work for you, I would love to hear about them. Please email me at livewelllivesmart@gmail.com .
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